Gifting an Apartment?
I want to buy my father-in-law an apartment (cash purchase, no mortgage). How do I do this? Can I put it in his name without him incurring taxes? I know I will eventually have to consult an accountant, but I was hoping to get some basic info first so I can be better informed. Thanks…
I want to buy my father-in-law an apartment (cash purchase, no mortgage). How do I do this? Can I put it in his name without him incurring taxes? I know I will eventually have to consult an accountant, but I was hoping to get some basic info first so I can be better informed. Thanks for any help at all–I greatly appreciate it.
Can I be your father-in-law? =)
If it is a cooop, talk with the closing department of the management company and get the sale package. You may also want to consider setting up a trust and having the trust purchase the apartment. Most coop boards will not have a problem.
For what it is worth, you may also want to note that by using up your gift tax exclusion today when you make the gift, you reduce your available estate tax exclusion upon your demise. This is because there is a unified gift/estate tax credit.
Also, be aware that some coops will not allow this. Some specify that the purchaser must reside in the apartment. And then there is the question of who pays the maintenance.
It is good to know a knowledgeable person answered the inquiry. This info helps everybody.
Thank you bklyn_born! Much appreciated.
Yes you can. He does not incur the taxes. As the person giving the gift, the current law allows you to give a tax free gift to a person of $13,000 per year. This is used by a lot of older people who want to reduce their assets if they have large estates. You are required to file a gift tax return for any gift over $13,000. So if you gave someone $100,000, you would reduce the $100,000 by $13,000, and that is the amount you would file on the gift tax return. For the apartment, you would be required to file the gift tax return and report the value of the apartment given to him. Your lifetime gift tax exclusion is 1 million. So, most likely you would not have to pay any gift tax to the IRS as long as the apartment is less than that amount. Check the IRS website for more information.